the vte.pc file was changed in the 0.11.16 release to have the gtk+, X, etc requires in the "Requires.private:" section, which apparently requires a new new pkg-config to work. The end result is those includes/cflags no longer show up when doing `pkg-config --cflags vte`. This has broken the compilation of gtk-sharp-2.4/2.6, and potentially others. The change to *revert* that vte.pc change is found in gnome CVS is here: http://cvs.gnome.org/viewcvs/vte/vte.pc.in?rev=1.12&view=markup Probably depping on some insanely new pkg-config file would work to solve it, but it seems preferable to apply the reverted change to the vte.pc file until a later time (since upstream seems to have taken this approach)
Thanks very much for the report. This is fixed in cvs with vte-0.11.16-r1.